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Question
A firm has total assets of $1,000,000 and a debt ratio of 30 percent. Currently, it has sales of $2,500,000, total fixed costs of $1,000,000, and EBIT of $50,000. If the firm's before-tax cost of debt is 10 percent and the firm's tax rate is 40 percent, what is the firm's ROE?
a. 1.7%
b. 2.5%
c. 6.0%
d. 8.3%
e. 9.8%
Answer
This answer is hidden. It contains 150 characters.
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